Walgreen weighs risky FTC gambit in Rite Aid merger

New York Post

7th March 2017

Walgreen is weighing a risky move to force the Federal Trade Commission to vote on its $9. 7 billion merger with rival Rite Aid, The Post has learned. Fed up with repeated delays on getting approval for the deal — which would create the nation’s largest drugstore chain — Walgreen may soon declare that it has “certified compliance” in its application, sources said.

The declaration would mean that, in Walgreen’s opinion, it has given regulators substantially all the information they need to make a decision. The move would give the FTC 30 days to complete its review of the proposed merger and take action if necessary, bringing a swift end to a vetting process that has dragged on since late 2015. It also, however, would amount to a gambit — namely that, if forced to vote on the deal, a FTC will not block it and it will clear with little need for more negotiation.

The FTC currently has just two commissioners sitting on its panel since Democrat Edith Ramirez stepped down as chairwoman Feb. 10 — Maureen Ohlhausen, a Republican, and Terrell McSweeny, a Democrat. The thinking is the two commissioners will not deliver the unanimous vote required to block the deal — and there are precedents for just such a scenario, sources said.

Alarm. com won FTC clearance in the last month in a controversial deal to buy rival Icontrol that gives the companies a 70 percent market share in the remote services for security systems space. They certified compliance and time elapsed without a suit.

That’s despite the FTC expressing concerns and taking 16 depositions, a source close to that case said. Ohlhausen did not vote to stop the deal. On Feb.

22, competitor Honeywell took the unusual step of suing in federal court in New Jersey to stop the merger. The court will soon decide if it has standing. Walgreen, meanwhile, is getting frustrated on its Rite Aid petition.

For at least the second time, FTC staff recently raised concerns about Walgreen’s plans to sell stores to a regional chain, Fred’s Pharmacy, to ease antitrust concerns, sources said. The merger, announced in October 2015, was stopped days away from expected regulatory clearance, sources said. A Aid combo would create America’s No.

1 pharmacy chain, surpassing CVS Health. The main concern among some at the FTC is Fred’s would be stretching itself financially to close the $950 million buyout of roughly 1, 000 Rite Aid stores and be forced to raise prices, a source following the situation said. Rite Aid shares, which fell 4 percent Monday to $5.

23, were recently off 1 percent at $5. 18 on Tuesday. The Walgreen offer is valued between $6.

50 and $7 a share contingent on how many Rite Aid locations must be divested to win clearance. Walgreen declined to comment..